While looking for good ways to invest money, you’re likely to speak to a financial adviser. If you are a novice investor, there are several oft quoted pieces of advice that come from financial advisers. Pound cost averaging normally plays an important role in the argument that you will do well investing in equities regularly over a long period in a diversified fund. This is statistically true, but the practise isn’t optimal unless you change your investment allocations every now and then from being overweight in, say UK equities, to being overweight in, say, emerging market equities.

The key thing about drip feeding money into the market is that you can ride out storms in that market. The key to allocation is that you can then jump between markets that are set for periods of outperformance…and that really is where the true game on investing lies…spotting out performing asset classes, regions, industry groups, stocks etc before they become well known and inflated in price.

One piece of wisdom that I was always told by my managers at a large UK financial institution was that the markets always come back and stocks are a good idea over a long period. Anyone who knows anything about investments knows this isn’t exactly true. I knew it wasn’t true and quit this job soon after. But this is the myth that trained professional “financial advisers” are told to go out and tell their clients. If you ever hear a financial adviser utter these words, show him the door politely and look for another.

Since I only have 20 years left in which I want to work, I’m really only interested in that time period. The fact is that stocks or countries don’t always do well over this time period. Japan is a good example of this from the late 80s to the present. The last 15 years in UK FTSE 100 equities has underperformed inflation and savings accounts. If you really want to do well with your investments, you need to learn enough about economics so that you can’t have the wool pulled over your eyes by a financial adviser who knows nothing when looking for good ways to invest money.